El Salvador, the first company to make bitcoin legal tender, again lowered its debt rating on Fitch

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Once again Fitch downgraded El Salvador’s long-term foreign currency issuer default rating from CCC to CC on Friday, further into junk territory. The country became the first country to make Bitcoin (BTC-USD) legal tender last year.

Fitch showed on the country’s weak fiscal liquidity positions “and extremely limited market access given the high fiscal funding needs and a large USD 800 million external bond maturity in January 2023 make a default of some kind likely,” it said in a report.

El Salvador’s funding needs were estimated at $3.7 billion for September-January 2023, including $1 billion in fiscal deficit, $1.2 billion in amortization and $1.5 billion in short-term debt, Fitch noted .

The somber coverage followed Fitch’s previous downgrade of El Salvador to CCC from B-, arguing that the adoption of Bitcoin (BTC-USD) has increased uncertainty about funding coming through an International Monetary Fund program for this and that would be released next year.

Bit down with Bitcoin (BTC-USD). 70% since its all-time high in November, El Salvador’s BTC holdings have been valued at less than originally invested. The token slipped 1% to $19.65,000 at 4:36 p.m. ET.

In January, the IMF asked El Salvador to revoke Bitcoin’s legal tender status.

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